More Than 40% of Student Borrowers Aren’t Making Payments • Hacker News Board

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#201

Post by elihu » Wed, Apr 06, 2016, 11:58 PM UTC

ameyamk wrote: post #23

I wonder if there is investment vehicle I can short to make some profit if these loans do actually go bad?

I was just thinking the other day, that it would be logical for there to exist something like a mortgage-backed security for student debt. Call it a millenial-backed security. You'd bundle up a bunch of student student loans into a security, then sell shares, paying out the interest as dividends. It'd be like 2007 all over again! What could possibly go wrong?

In a sense, I suppose that's not much different than buying stock in a bank that's heavily invested in student loans. You can invest in or short those as you see fit.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#202

Post by Overtonwindow » Wed, Apr 06, 2016, 11:58 PM UTC

A serious problem with student debt that is not talked about enough is the inflated cost of classes, schoolbooks, and the pile on of all of these extra classes that university forces you to take and pay for, that are there only to pay graduate students. It's crazy how many pointless labs you are forced to take now, classes that have never had labs before. I think we need to dramatically reduce the number of classes that students are required to take to get a degree.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#203

Post by skywhopper » Wed, Apr 06, 2016, 11:59 PM UTC

sh1ps wrote: post #22

A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me. Honestly it kind of reminds me of the whole Yelp minimum wage th…

It's unfair to blame the 17 year olds who are told by everyone they know and trust that getting a college education at the best school you can get into is the most important thing in the world. It's also unfair to blame them for not calculating the risk that in four years the degree they've been taught means everything will not be sufficient to get a high-paying job to cover rising housing costs and student loan debt when median wages have been falling.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#204

Post by speeder » Wed, Apr 06, 2016, 11:59 PM UTC

AJ007 wrote: post #42

sh1ps wrote: post #22

A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me. Honestly it kind of reminds me of the whole Yelp minimum wage th…

A big problem is that at age 17, all of the adults are saying go to college & take out these loans. Guidance councilors, teachers, parents. The most compliant high schoolers will just do what they are told without thinking about it further. I imagine this will start changing. When I was a kid, that group of adults had the benefit of cheap degrees. Today, now that group of adults is us and we did not go to school chea…

I am from Brazil, and was victim of the same thing.

Worse, I could if I had spent a year studying or so, join a free university, but even that was unnaceptable, the "right thing" to do was take a loan and dive in a expensive course.

I finished college in 2009, I still don't got my first legal job, and I still have debts, I am struggling to buy medicine I need.

Meanwhile everyone I know that ignored the "adults" and did whatever they wanted, managed to actually start a life, and now have house, vehicle, sometimes kids... meanwhile I just have a stupid piece of paper that is not good even to wipe my ass with (the university diploma they gave me is just a normal A4 paper printed in a normal inkjet).

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#205

Post by williesleg » Wed, Apr 06, 2016, 11:59 PM UTC

Doesn't matter. The parents are responsible. Even if they didn't sign for the loan or have any knowledge of it.

Next they'll be going broke and we'll have to wait for more handouts from the government. Feel the Bern! Thanks Obama!

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#206

Post by whitegrape » Thu, Apr 07, 2016, 12:00 AM UTC

pink_dinner wrote: post #94

We really need to educate students potentially starting college that they shouldn't major in something that pretty much has no chance of ever paying it back. This applies to most liberal arts programs. A college education is a major investment. It's sad that culturally, our financial education is this poor. I majored in a science and had all of my debts paid off within 5 years. I have friends that majored in things l…

Education on the individual level just doesn't work. People are too dumb. (I had the pleasure of rereading this recently: http://www.overcomingbias.com/2009/07/stupider-than-you-real...) Those that aren't too dumb lack personal responsibility, which is a separate problem I fully agree is pretty big, so more education might fix that, but that's sort of something you can't learn from a book, and arguably the game of chicken at teaching responsibility by making it illegal to discharge student loans in bankruptcy has just made things worse.

The solutions I think have the best shot are those that involve authoritarian decrees one way or another (that is, going full free-market or going full nationalized colleges), but that requires a government with an actual interest in governing.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#207

Post by reality_czech » Thu, Apr 07, 2016, 12:01 AM UTC

erichocean wrote: post #146

sh1ps wrote: post #22

A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me. Honestly it kind of reminds me of the whole Yelp minimum wage th…

> A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Student loans are the only legal way to sell yourself into "debt slavery"[0] in the United States. It's not the 17 year olds that are screwing up, it's society as a whole by even allowing this situation to exist. [0] https://en.wikipedia.org/wiki/Debt…

I agree with this 100%. Student loan debt should not be treated specially. It should just be normal debt that you can discharge through bankruptcy.

At that point, the incentives of schools and the incentives of students would be aligned. Schools would not lend huge sums to students unless they had confidence that the education those students got was adequate to prepare them to repay. And the situation would fix itself. The fixed situation would probably have a lot fewer humanities students, and those students would have better job prospects since supply and demand would be aligned. Degrees would be shorter and less expensive, and overheads would be lower.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#208

Post by jonlucc » Thu, Apr 07, 2016, 12:01 AM UTC

tyre wrote: post #59

We have set students up to fail. On the one hand, we tell them that everyone has to go to college and that more education is better. Regardless of whether more education has any financial return. Is that the only metric? Absolutely not, but there is a point at which education is a luxury.[1] My entire high school education was focused on how to get into the "best" college. On the other hand, in order to get that educ…

> Regardless of whether more education has any financial return.

Interestingly, this is a difficult problem to crack, because it is valuable to have the degree. In 2008, people without a college education were hit the hardest in terms of jobs lost; the jobs for college educated went to basically no growth, but didn't quite tip into job loss.

So if I'm a kid trying to make this decision, do I choose high debt with some chance of having a stable future or a cheap barrier to entry for a job that is likely to crap out as soon as the economy looks bad again?

> they have little to no understanding of—let alone, ironically, education—about personal finance

This is also important to me. Having lived with my parents until college (which I think is the norm), I don't think I would have really understood what it means to pay $500 or $1500 a month on my loans.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#209

Post by Camillo » Thu, Apr 07, 2016, 12:02 AM UTC

beatpanda wrote: post #110

sh1ps wrote: post #22

A big takeaway from this article (for me) is that people are surprised that 17 year old kids don't understand what they're doing when they take out that college loan. Shock and astonishment despite there being little to no preparation for this kind of financial understanding previously in their education. That surprise and shock shocks and surprises me. Honestly it kind of reminds me of the whole Yelp minimum wage th…

This is insulting. What choice do you think these kids have? A university degree is the only gateway to social mobility available to most young people in the United States, and at current prices, most of them can't actually afford it. What do you expect the kids to do? "Gee, I guess I'll just have to spend the rest of my life in the service industry, making other people rich." Give me a break. Of course they're going…

Social mobility means that people who have talent and work hard can get to a higher class even if they were born in a lower class. It cannot possibly mean that the entire population is going to become college professors, while nobody does service jobs any more.

Re: More Than 40% of Student Borrowers Aren’t Making Payments

#210

Post by prostoalex » Thu, Apr 07, 2016, 12:02 AM UTC

dv_dt wrote: post #194

I this comes out of the flawed meme of private enterprise efficient/gov't inefficient. Thought it's true in some areas, in the area of funding education in society, it's terrible. The loans push money to unsophisticated buyers (kids and their parents), who use it to make a huge amorphous transaction which is only performed once in their lives and plays out over years. There's insufficient buyer information to provide…

That strategy seems to work for Year 1, but what happens when (a) universities expand to cover this newly created demand, thus requiring larger budgets, (b) people enroll only to find out that the classes they are interested in are full?

To quote http://www.theatlantic.com/magazine/archive/2015/05/the-upwa...

"When it comes to college, the central challenge for most Americans in the 21st century is not going; it’s finishing. Thirty-five million Americans now have some college experience but no degree. More Americans than live in Texas, in other words, have spent enough time at college to glimpse the promised land—but not enough to reap the financial bounty. Some are worse off than if they’d never enrolled at all, carrying tens of thousands of dollars in debt, not to mention the scar tissue of regret and self-doubt.

President Obama’s recent proposal to have the federal government and states pay for two years of community college is elegantly simple, and would surely prompt more students to enroll. But community college is already close to free for most low-income students, and still only 4 percent of all community-college students earn a two-year degree in two years. (Yes, 4 percent.) Money is just part of the problem."